Bank scam fines to pass £60bn. That's not including the cost of global collapse, of course!

SOURCE DAILY MAIL: Britain's biggest banks face further £19bn of fines and charges to pay for financial scandals

The UK’s ‘big four’ banks – HSBC, Barclays, Lloyds Banking Group and Royal Bank of Scotland – have already racked up a £42billion bill in the UK over the last five years. This represents 88 per cent of the industry wide total of £48billion in charges faced by 13 banks and building societies in Britain. S&P said it now expects the UK’s four biggest lenders to face further penalties in 2015 and 2016 of £19billion – taking the total for the big four to £61billion. The bill has been driven by the mis-selling of payment protection insurance (PPI) as well as interest rate hedging products to small and medium-sized businesses. ‘We think that conduct and litigation charges are now a way of life for the UK banking industry,’ said S&P in the report.

Read More

Graphs at a glance: Financial regulation in the USA and the UK: Federal Marshal versus Sleeping Policeman

Winston Churchill said of America:

“You can always rely on America to do the right thing once it has exhausted all the alternatives”

Sadly, the same can’t be said of Britain.

London and New York have fought for the top “Global Financial Centre” spot for years. According to the March 2014 “Global Financial Centres Index” produced by Z/yen, who describe themselves as “the City of London’s leading commercial thinktank”:

“New York is now the leading centre, although its lead over London is statistically insignificant – two points on a scale of 1,000.”

What is it about crusty old London that keeps it head-to-head with glitzy New York? According to a puff-piece by the City of London Corporation the key elements to a Global Financial Centre are:

• Critical Mass; Connectivity; People; Regulation; Domestic Market Infrastructure; Business Environment

Six solid gold attributes that New York and London can both offer. But London offers something even more valuable! In March 2014 the Financial Times reported that the total fines paid since the Banking Crash by banks to US regulators hit the US$100 billion mark:

"Wall Street banks and their foreign rivals have paid out $100bn in US legal settlements since the financial crisis, according to Financial Times research, with more than half of the penalties extracted in the past year."

Figures show that in 2008 both UK and US regulators were fining banks a similar amount - reflecting the fact that the US regulation was then just as spineless as the UK. But by 2013 UK regulatory fines were only one fiftieth US fines.

Exchange rate US$1.6 = £1

Read More

Opening up the Annuities market is good news for pensioners? How about fixing the annuities and pension fee rip-offs in the first place?

Read More

Graphs at a glance: Easy mortgages and PPI compensation taught Osborne handing out cash boosts the economy. Is that why he is giving us our pension pots to spend?

Chancellors of her Majesty's Exchequer are programmed to produce fists full of lolly in the year before an election. John, Norman, Ken, Gordon and Alistair did it. George Osborne was no different in the 2014 Budget. Chancellors in the year before an election produce lolly like the Child Catcher from Chitty Chitty Bang Bang.



The biggest lolly George is handing out in the 2014 Budget is our pension pots. Up until this brightly wrapped idea we were required to give at least 75% of our pension pots to pension companies, by buying an annuity. Now Osborne says we can take the money ourselves and do the right thing with it for our old ages.

This is of course a change of heart from Osborne. In the 2012 Budget Osborne thought pensioners were just simple souls. He said:

“We should also simplify the age related allowances - which the Office of Tax Simplification have recently highlighted as a particularly complicated feature of the tax system…The National Audit Office points out that many pensioners don't understand them."

Osborne's idea of ‘simplifying’ the age related allowances was to scrap them completely. A move Ros Altmann, the pensions expert, described as follows:

“This Budget contains an enormous stealth tax for older people. Over the next five years, pensioners with an income of between £10,500 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected.”

So why has Osborne decided that pensioners who are befuddled by a "tax doesn't have to be taxing" self-assessment form are astute enough to set up an investment programme to provide an income for themselves for the remainder of their lives? It is undoubtedly true that pension companies have been ripping off pensioners for years with rotten annuities. The financial services regulator the FCA reported in 2014 that pension companies swipe £230 million a year from pensioners in this way. But that scam has persisted because successive governments have allowed it to, having skipped every opportunity to legislate and sanction. 

Does Osborne think the best way to get the pension company wolves away from the pensioners’ doors is to take away the doors?

Read More

Claims Management Companies: a necessary pest

We at Ripped-Off Britons generally spend our time exposing rippers-off. For a change we want to put in a good word for a pack of ruthless ravaging ripping-off locusts. The good (consumer groups), the bad (bankers), and the ugly (the British Bankers Association (BBA)) have all condemned claims management companies, accurately stating that they charge a packet to do what Britons can easily do by themselves for free. But we are in good company in valuing the services of these insects. After all locusts have been deployed by no higher an authority than God himself to rescue his people:

“If you refuse to let them go, I will bring locusts into your country tomorrow. They will cover the face of the ground so that it cannot be seen. They will devour what little you have left after the hail, including every tree that is growing in your fields.”

Exodus 10:3-6

God sent the plague of locusts to persuade the pharaoh to release Moses and his people from slavery in ancient Egypt. Even His people can’t have welcomed their arrival, as they would have been the first to lose their rations in any ensuing famine. But it was a price worth paying as the locusts, along with a series of other nastiness, got them out of slavery. If only Pharaoh had been more reasonable it would never have been necessary. Pharaoh brought the locusts onto himself, his country, and his victims. The plague of claims management companies has been brought on by the actions of the banks and the inactions of the courts and regulators. 

Locusts are far from the first choice solution for the banks' Payment Protection Insurance (PPI) thieving. However considering the alternative choices it becomes apparent that Claims Management Companies are the worst possible option except that of doing nothing and letting the banks keep the money:

Read More

The FSA's largest retail fine for scandalous mis-selling. The real scandal is the fine is so small compared to the scam.

If you fine someone far less money than what they made from the scam in the first place, you are giving them a clear signal to do it again. Here is a typical example.


The FSA imposed a "record fine" on CPP, who describe themselves as a provider of "Life Assistance products designed to make life less stressful". A penalty that CPP has accepted.

The greatest scandal is not what CPP got up to, but the FSA's performance in this debacle. What CPP did is typical of what financial services companies do: mis-sell (PPI; Mortgage Endowments; Personal Pensions; Interest Rate Swaps...).

Don't blame a dog that is trained to bite when it does bite - blame the trainer. The FSA has been training the financial industry for years that the penalties of biting their customers will be a tiny fraction of their profits. CPP is just the latest case in point, showing that even in the final months before the FSA is closed and replaced in 2013 it is determined to live down to its abysmal reputation. We sincerely hope that the FSA is being closed, though rather fear it is being cloned into its 'replacement' the spookily similarly named Financial Conduct Authority (FCA). After all, financial companies are among the most generous donors to political parties, and the most extravagant lobbyists (£92 million was spent by finance industry on lobbying in 2011).

The FSA’s “record fine” imposed on CPP exposes a number of nasty facts. None  nastier than the fact that the total stated penalty was less than 3% of the money taken by CPP selling the products in question. All the following facts are extracted from the FSA’s judgement. The two products CPP was punished for were Card Protection and Identity Protection. Each was sold as insuring you against the costs of fraudulent use of your card or your identity.

1)      Sales and Fines

The FSA imposed a “record fine” of £10.5 million. CPP also "estimates that around £14.5 million will need to be paid to affected customers" (presumably this small amount is because CPP assumes most customers won't claim - unless the claims handling companies get in on the act!!)  Sounds a lot? Well, that would depend on how much CPP made from selling these products. According to the FSA judgement:

“The principal sales failings which the FSA has identified relate to the period from 14 January 2005 to March 2011. During this period:

• CPP sold 4.4 million Card Protection and Identity Protection policies and received £188.3 million in customer payments
• CPP renewed 18.7 million Card Protection and Identity Protection policies and received £656.5 million in customer payments
• CPP generated gross profits of £354.5 million and net profits of £79.1 million.

A £10.5 million fine, and £14.5 million compensation bill? But CPP took £844.8 million in customer payments. The FSA punishment was just over 1% of sales, and compensation amounted to less than 2% of sales.

Read More

The OFT says insurers are inflating costs for repairs and hire vehicles by £225m a year

Chris and his wife find out the hard way...

Read More

Aviva fat cat CEO stumbles on the magic number

Chris, Fee and KJ on the departure of Aviva boss Andrew Moss

Read More

The gang debate the safety of wave-and-pay cash-free systems

Consumers – and con artists – get behind contactless payments

Read More

Labour's fairness pledge for consumers

Labour reinvent the wheel in the name of consumer rights

Read More

Retirement plans

The Dilnot report is good news all round – especially for inheritors, Chris and his wife decide

Read More

Insurance companies in need of a painkiller

Chris, Fee and KJ discuss the eye-watering cost of false personal injury claims

Read More

Price comparison sites: you pay your money ...

But are you actually covered? Fee and Chris enlighten KJ

Read More

Sticking it to the airlines by getting stuck

KJ seeks to exploit the airlines as volcanic disruption looms

Iceland volcanic ash cloud airports airlines holiday travel disrupts flights cancellations UK grounds

Read More

PPI leaves its mark on the population

Chris, Fee and KJ pay their respects to the PPI victims

UK banks won't appeal ruling to compensate customers missold payment protection insurance, Lloyds to settle PPI claims, PPI: 'Banks behaved disgustingly', Coming up: Jan. PPI, housing starts, Payment protection insurance complaints still rising, US core PPI falls in Oct, largest drop in 4 yrs, Payment protection insurance sale curbs approved

Read More

Fear of financial services outguns terrorism

After a historic victory over the banks on mis-selling Payment Protection Insurance (PPI), our heroes discover why the FSA is now investigating the banks' newest idea: ID Theft Insurance

[KEYWORDS: Three million bank customers ripped off over payment protection insurance in line for payouts worth £4.5bn after High Court victory, Payment protection insurance complaints still rising

Payment protection insurance sale curbs approved, Payment protection insurance complaints soar

Lloyds stops selling payment protection insurance, Complaints over payment protection insurance on the rise, says FOS, New rules on payment protection insurance are delayed, PPI, refund, compensation, rip-off

income protection, income protection insurance, ppi, redundancy insurance, unemployment insurance, mortgage payment protection, mortgage protection insurance, mortgage protection, mortgage insurance]

Read More

Payment Protection Insurance: bankers appeal to protect their right to do wrong

The banks have been comprehensively routed in the courts, and been publicly exposed in the most blatant stinking mis-selling of overpriced insurance to people who didn’t want it, didn’t understand it, and to people who weren’t even eligible to claim on it. So why are the banks going to draw out their humiliation with an appeal over Payment Protection Insurance (PPI)? The reason has little to do with PPI itself, and everything to do with something much more fundamental to the industry. The banks need to protect their right to do the wrong thing.

Regulation in the UK has been like a television game-show. The competitors – the banks, investment companies, insurers and the like – get to keep everything they can grab until the clock runs out. Gutless regulation and enforcement in the UK spends years investigating a rip-off, and then requires rippers-off to stop the ripping and pay fines and compensation that are a fraction of the ill-gotten gains. Leaving them to pocket the balance. A fact that is clear from the paltry fines imposed by the FSA.

This allows the rippers-off years of making profit, and then moving on to their next rip-off. Already a new variety of insurance “Accident, Sickness and Unemployment”, which seems to be closely related to PPI, is being marketed.

It is the “game-show regulation” that the British bankers want to salvage. In the PPI judgement of April 2011 the High Court backed the requirement from the FSA that the Financial Services Industry must not only stop perpetrating the PPI rip-off, but must compensate all victims, including those who haven’t complained, from the start of their ripping.

The banks will fight to hold on to their historic right to be able to do things that are plainly wrong, on the basis that

• They didn’t break the rules, and can keep all their profits up to the time the rules are changed.
• They only have to compensate people who complain. Those who don’t complain, either because they don’t realise they have been ripped off or because it simply isn’t in their nature to complain, can get stuffed.

Read More

High Court ruling leaves consumers feeling H-a-PPI

Chris, Fee and KJ on a consumer win over payment protection insurance

Read More

Regulatory Fines – the most lucrative investment a bank (or any financial services company) can make

London, New York, and Chicago are the World’s main financial centres. There was a time, only a decade or two ago, when this was principally because of the need to communicate.  The Lloyds Insurance Market’s lifeblood was the stream of insurance brokers walking along Lime Street to sit, in offices and restaurants, with the underwriters negotiating and administering insurance policies. Exchanges from stocks and shares to futures and options involved traders massed together in large open halls shouting deals at one another. The reason for these cities’ pre-eminence was the advantages that came from being at the centre of trading – which once could only be done by being physically there in person. Now your physical presence is no longer required to trade in person. Placing insurance and trading shares, futures, and options is done electronically. Where you are in the world doesn’t matter.

However, the falling importance of physical location has not undermined London, New York or Chicago. New York and Chicago remain locations of choice because they are at the centre of the World’s largest economy. London joins them at the top table because of the promise of pussy-ish regulation. From banking and trading all the way to personal taxation, regulation in London and to a lesser extent in the USA has been bent into a pretzel to be accommodating.

Financial services firms have long since learned that the most lucrative of all their investments is the money they pay in fines, without admitting wrong-doing, which allow them to carry on with their dodgy doings. They regard paying fines as a cost of doing business, just like paying their rent and their electricity bill.

In evidence taken by the US Senate in 2003, investigating dodgy tax evasion tactics, it was stated that a senior KPMG tax professional calculated just how excellent an investment paying fines is.

“Based upon our analysis of the applicable penalty sections, we conclude that the penalties would be no greater than $14,000 per $100,000 in KPMG fees”… “For example, our average [OPIS] deal would result in KPMG fees of $360,000 with a maximum penalty exposure of only $31,000.”

Read More

Banking on Payment Protection Insurance

Our three heroes, Fee, Chris and KJ, bet on the banks coming out best in the BBA's high court challenge on PPI

Read More